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Hydro hike questioned after profits rise

Manitoba Hydro expects to earn a profit this year that is more than three times higher than it projected less than five months ago, raising questions about its need for a proposed 3.5 per cent rate hike.

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Hey there, time traveller!
This article was published 09/04/2019 (1392 days ago), so information in it may no longer be current.

Manitoba Hydro expects to earn a profit this year that is more than three times higher than it projected less than five months ago, raising questions about its need for a proposed 3.5 per cent rate hike.

In a briefing note for the Pallister government, the Crown corporation says it has revised its net income estimate to $115 million for the 2019-20 fiscal year — up from $31 million.

Manitoba Hydro applied to the Public Utilities Board for the increase in electricity rates Nov. 30. It will appear before a PUB hearing later this month to further justify its application.

MIKAELA MACKENZIE / WINNIPEG FREE PRESS Finance Minister Scott Fielding: Heavy spending by the former NDP government created financial challenges for Hydro.

Any PUB-approved rate hike isn’t likely to take effect until June 1, at the earliest, according to the Crown Services briefing note, dated “spring 2019.”

Hydro credits several factors for the profit forecast.

“The improvement in financial results is due to higher net export revenues resulting from the improved water flow conditions, as well as lower levels of capital spending than planned in 2018-2019, and the associated lower borrowing requirements and finance expense,” according to the briefing note obtained by the Manitoba NDP.

Opposition Leader Wab Kinew raised the issue in the legislature, asking the government whether it agrees with the corporation’s decision to continue to seek the hefty hike in electricity rates. He said ratepayers need a break on hydro bills and the corporation should propose a lower rate increase.

Finance Minister Scott Fielding later said Hydro’s heavy spending on capital projects under the former NDP government had created financial challenges for the Crown corporation. He said the hydro rates Manitobans ultimately pay will be decided by the PUB.

“It’s an independent process, so I can’t as a minister tell you what the rate should and shouldn’t be,” Fielding said.

Hydro says it filed its revised projection with the PUB on Feb. 14. If its rate hike request is approved, the June 1 rate increase would result in a $3.30 increase in the monthly bill of a residential customer without electric space heating using 1,000 kilowatt-hours per month, and a $6.30 increase for a residential customer with electric space heat using 2,000 kWh per month, the corporation estimates.

If Manitoba Hydro is successful in its application, consumers would be facing a significant increase in electricity rates for the second year in a row. On June 1, 2018, rates increased an average of 3.6 per cent for consumers and industrial users.

Hydro told the PUB last fall without an increase in rates, it faced a loss in electrical operations of $28 million for 2019-20.

MIKAELA MACKENZIE / WINNIPEG FREE PRESS Opposition leader Wab Kinew: Ratepayers need a break on hydro bills.

Hydro spokesman Bruce Owen said the corporation will continue to ask for a 3.5 per cent increase effective June 1 when the PUB hearings begin April 24.

“We believe this proposed increase will allow us to continue to do the needed maintenance work and upgrades required on our system throughout the province so we can continue to serve Manitoba (as) effectively as we can,” he said.

The proposed rate hike would also buffer consumers from sharper rate increases in the future as major power generating and transmission projects come into service and Hydro begins paying off those debts, Owen said.

Byron Williams, lawyer for Winnipeg Harvest and the Consumers Association of Canada (Manitoba), said his clients believe the corporation’s rate request is not justified.

He said Manitoba Hydro’s projected bottom line has improved substantially since the original rate application. Even without a rate increase, Hydro is projected to earn a profit of more than $60 million, he said.

larry.kusch@freepress.mb.ca

Larry Kusch

Larry Kusch
Legislature reporter

Larry Kusch didn’t know what he wanted to do with his life until he attended a high school newspaper editor’s workshop in Regina in the summer of 1969 and listened to a university student speak glowingly about the journalism program at Carleton University in Ottawa.

History

Updated on Tuesday, April 9, 2019 9:18 PM CDT: Updates headline, first two paragraphs

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